Independent Power Tanzania (IPTL) / unsolicited power deal outside least-cost plan
Risk Mechanism
An unsolicited power project was advanced through direct negotiation outside the plan for meeting power demand at the lowest overall cost and without transparent competition, locking in a costly delivery model and contract terms that favoured particular interests over value for money.
Case Summary
The World Bank PPP Reference Guide cites IPTL as a directly negotiated power project initiated after an unsolicited proposal during a power crisis. The project was contested because it relied on heavy fuel oil rather than domestic gas, departed from least-cost power planning, lacked transparent competitive procurement, and faced questions about need. Although arbitration reduced project costs, they remained high by international standards, and later sector reviews linked IPTL’s unusually expensive outcome to non-competitive procurement and disputed contracting.
Risk Lesson
This case demonstrates how unsolicited power-project proposals can bypass least-cost planning and competitive procurement, leading to high-cost delivery models and weakly justified contract terms. It highlights warning signs such as crisis-driven direct negotiation, departure from approved least-cost power plans, inadequate testing of technology and demand assumptions, and project costs that remain high even after renegotiation or arbitration.
Reference
World Bank. (n.d.). Benefits and pitfalls of unsolicited proposals. Available from: https://ppp.worldbank.org/index.php/benefits-and-pitfalls-unsolicited-proposals